This is a follow up to my last post on BRK.A v BRK.B from Nov. 4.
I previously mentioned that if you missed out on the Berkshire Hathaway Inc. Class A (NYSE: BRK-A) stock, which is now worth over $460,000, up from $430,000 when I wrote my November post, then you will want to keep an eye out on BRK.B stock, or Berkshire Hathaway Class B shares.
BRK.B was worth only $288 when I wrote my last post and is now trading at just under $310, still cheap in comparison to BRK.A.
Warren Buffett’s 6 Largest Positions
There are several factors as to why this is a stock worth investing in. Let’s break them down.
- It has an excellent history of performance. The price has moved over 580% from the low of 2009 from $40 to the current price just short of $310.
- The price is printing new all-time highs (ATHs). An asset printing new ATHs is likely to trend very well as there is little resistance ahead of price. Only a complete market reversal will see price move from bullish to bearish.
- The price has just broken out of an eight-month period of consolidation. As the saying goes, the longer the consolidation, the bigger the breakout. This consolidation has a very high potential to act as a solid base for a long-term trend to develop.
- The daily 20 and 50 simple moving averages act as support, creating a linear trend. For investors, this means a smooth journey and areas we can determine in advance where pullbacks are likely to end.
- The average volume is around 5 million, adding to the chances of this stock trending well. There will also be little trouble when the time comes to sell this stock.
Below is the monthly timeframe. The solid performance of the stock is clear to see.
Below is the daily timeframe. I have highlighted the eight-month period of consolidation followed by the breakout this week.
The question now remains, what is the upside potential? The answer, of course, is that no one knows, and we don’t need to know. We just let price dictate, and we follow the trend with a pre-thought out exit management plan laid out in your trading plan.
As I mentioned in my previous article on the S&P 500, I use round numbers to determine how far price is likely to go, following price with a trailing stoploss.
As price on BRK.B has just cleared $300, the major levels I see price targetting are $500 and then $1,000.
Since last year, I have had positions in play, and I will strategically add new positions (compound) as the trend develops.
Keeping it simple is always the best approach.